8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) ofthe Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): August 1, 2019

PennyMac Financial Services, Inc.

(formerly known as New PennyMac Financial Services, Inc.)

(Exact name of registrant as specified in its charter)

Delaware	001-38727	83-1098934
(State or other jurisdiction	(Commission	(IRS Employer
of incorporation)	File Number)	Identification No.)

3043 Townsgate Road, Westlake Village, California	91361
(Address of principal executive offices)	(Zip Code)

(818) 224‑7442

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.0001 par value	PFSI	New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02    Results of Operations and Financial Condition.

On August 1, 2019,  PennyMac Financial Services, Inc. (the “Company”) issued a press release announcing its financial results for the fiscal quarter ended June 30,  2019.  A copy of the press release and the slide presentation used in connection with the Company’s recorded presentation of financial results were made available on August 1, 2019 and are furnished as Exhibits 99.1 and Exhibit 99.2, respectively.

The information in Item 2.02 of this report, including the exhibits hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liabilities of Section 18, nor shall it be deemed incorporated by reference into any disclosure document relating to the Company, except to the extent, if any, expressly set forth by specific reference in such filing.

Item 9.01    Financial Statements and Exhibits.

(d)  Exhibits.

Exhibit No.	Description
99.1	Press Release, dated August 1, 2019, issued by PennyMac Financial Services, Inc. pertaining to its financial results for the fiscal quarter ended June 30, 2019.
99.2	Slide Presentation for use beginning on August 1, 2019 in connection with a recorded presentation of financial results for the fiscal quarter ended June 30, 2019.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	PENNYMAC FINANCIAL SERVICES, INC.
Dated: August 2, 2019	/s/ Andrew S. Chang
	Andrew S. Chang
	Senior Managing Director and Chief Financial Officer

EX-99.1

Exhibit 99.1

Media	Investors
Janis Allen	Christopher Oltmann
(805) 330-4899	(818) 264-4907

PennyMac Financial Services, Inc. Reports

Second Quarter 2019 Results

Westlake Village, CA, August 1, 2019 – PennyMac Financial Services, Inc. (NYSE: PFSI) today reported net income of $72.7 million for the second quarter of 2019, or $0.92 per share on a diluted basis, on revenue of $303.0 million.  Book value per share increased to $22.72 from $21.72 at March 31, 2019.

Second Quarter 2019 Highlights

· Pretax income was $99.6 million, up 65 percent from the prior quarter and 33 percent from the second quarter of 2018

O    Driven by strong Production segment performance and disciplined hedging of mortgage servicing rights (MSRs)

· Production segment pretax income was $98.2 million, up 109 percent from the prior quarter and 417 percent from the second quarter of 2018

O    Total loan acquisitions and originations were $24.1 billion in unpaid principal balance (UPB), up 45 percent from the prior quarter and 51 percent from the second quarter of 2018

O    PFSI’s correspondent interest rate lock commitments (IRLCs)  1 totaled $12.7 billion in UPB, up 64 percent from the prior quarter and 24 percent from the second quarter of 2018

¹ Consists of correspondent government and non-delegated IRLCs

O    Direct lending IRLCs were $4.1 billion in UPB, up 53 percent from the prior quarter and 129 percent from the second quarter of 2018

O    Correspondent acquisitions of conventional loans fulfilled for PennyMac Mortgage Investment Trust (NYSE: PMT) were $10.7 billion in UPB, up 32 percent from the prior quarter and 99 percent from the second quarter of 2018

· Servicing segment pretax loss was $2.7 million, down from pretax income of $11.2 million in the prior quarter and $54.6 million in the second quarter of 2018

O    Valuation-related items included a $259.2 million loss in the fair value of MSRs, partially offset by $209.4 million in hedging and other gains; net impact on pretax income was $(49.8) million and on earnings per share was $(0.46)

O    Pretax income excluding valuation-related items was $47.1 million, up 33 percent from the prior quarter and 32 percent from the second quarter of 2018

–    Record quarterly operating profitability driven by a growing servicing portfolio coupled with the ongoing realization of greater scale and cost efficiencies

O    The servicing portfolio grew to $334.5 billion in UPB, up 3 percent from March 31, 2019, and 27 percent from June 30, 2018

· Investment Management segment pretax income was $4.0 million, up from $2.1 million in the prior quarter and $1.1 million in the second quarter of 2018

O    Revenue of $10.4 million, an increase of 18 percent from the prior quarter and 50 percent from the second quarter of 2018

O    Net assets under management (AUM) were $1.9 billion, up 13 percent from March 31, 2019 and 26 percent from June 30, 2018, driven by $214 million in new common equity raised by PMT during the quarter in light of its significant investment opportunities

“PFSI delivered strong results across all of its business segments in the second quarter with profits driven by record loan production and improved margins, which we continue to see in the current market environment,” said President and CEO David Spector.  “Key to our performance this quarter has been the disciplined focus on and execution of our sophisticated interest-rate risk management strategy, which substantially mitigated the impact of fair value losses on our MSRs resulting from the significant decline in mortgage rates this quarter.  In addition, our servicing portfolio delivered strong operating earnings as we continue to focus on key cost metrics and scale efficiencies.  I am also pleased with the

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results in our investment management business as PMT’s compelling organic investment strategies provided strong returns and PMT successfully raised new capital for these opportunities.”

The following table presents the contribution of PennyMac Financial’s Production, Servicing and Investment Management segments to pretax income:

	Quarter ended June 30, 2019
		Mortgage Banking					Investment
	Production		Servicing		Total		Management		Total
		(in thousands)
Revenue
Net gains on loans held for sale at fair value	$	124,860	$	22,673	$	147,533	$	-	$	147,533
Loan origination fees		36,924		-		36,924		-		36,924
Fulfillment fees from PMT		29,590		-		29,590		-		29,590
Net servicing fees		-		59,134		59,134		-		59,134
Management fees		-		-		-		8,832		8,832
Net interest income (expense):
Interest income		18,900		52,000		70,900		-		70,900
Interest expense		13,898		39,015		52,913		11		52,924
		5,002		12,985		17,987		(11)		17,976
Other		117		1,332		1,449		1,539		2,988
Total net revenue		196,493		96,124		292,617		10,360		302,977
Expenses		98,249		98,797		197,046		6,341		203,387
Pretax income		98,244		(2,673)		95,571		4,019		99,590

Production Segment

Production includes the correspondent acquisition of newly originated government-insured mortgage loans for PennyMac Financial’s own account, the underwriting and acquisition of loans from correspondent sellers on a non-delegated basis, fulfillment services on behalf of PMT and direct lending through the consumer direct and broker direct channels.

PennyMac Financial’s loan production activity for the quarter totaled $24.1 billion in UPB, $13.4 billion of which was for its own account, and $10.7 billion of which was fee-based fulfillment activity for PMT.  Correspondent government, non-delegated and direct lending IRLCs totaled $16.7 billion in UPB, up from $10.4 billion in the prior quarter.

Production segment pretax income was $98.2 million, an increase of 109 percent from the prior quarter and 417 percent from the second quarter of 2018.  Production revenue totaled $196.5 million, up 52 percent from the prior quarter and

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120 percent from the second quarter of 2018.  The quarter-over-quarter increase resulted from a $58.1 million increase in net gains on loans held for sale, driven primarily by higher production volumes and margins in our consumer direct production channel, leveraging the Company’s scalable mortgage fulfillment platform to address the opportunity provided by lower mortgage rates.

The components of net gains on loans held for sale are detailed in the following table:

	Quarter ended
	June 30,		March 31,		June 30,
	2019		2019		2018
	(in thousands)
Receipt of MSRs in loan sale transactions	$	176,493	$	114,957	$	153,924
Mortgage servicing rights recapture payable to PennyMac Mortgage Investment Trust		(1,408)		(1,123)		(936)
Provision (reversal of liability) for representations and warranties, net		(727)		3,143		143
Cash investment (1)		(49,005)		(23,023)		(106,946)
Fair value changes of pipeline, inventory and  hedges		22,180		(9,178)		14,761
Net gains on loans held for sale	$	147,533	$	84,776	$	60,946
Net gains on loans held for sale by segment:
Production	$	124,860	$	66,721	$	33,966
Servicing	$	22,673	$	18,055	$	26,980

(1) Net of cash hedge expense

PennyMac Financial performs fulfillment services for conventional conforming and jumbo loans acquired by PMT from non-affiliates in its correspondent production business.  These services include, but are not limited to: marketing; relationship management; the approval of correspondent sellers and the ongoing monitoring of their performance; reviewing loan data, documentation and appraisals to assess loan quality and risk; pricing; hedging and activities related to the subsequent sale and securitization of loans in the secondary mortgage markets for PMT.

Fees earned from the fulfillment of correspondent loans on behalf of PMT totaled $29.6 million in the second quarter, up 7 percent from the prior quarter and 103 percent from the second quarter of 2018.  The quarter-over-quarter increase in fulfillment fee revenue was driven by a 32 percent increase in acquisition volumes by PMT, partially offset by the decrease in the weighted average fulfillment fee rate to 28 basis points from 34 basis points in the prior quarter, reflecting discretionary reductions to facilitate successful loan acquisitions by PMT.

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Net interest income totaled $5.0 million, a decrease from $10.5 million in the prior quarter and $15.8 million in the second quarter of 2018.  Net interest income included $3.9 million in incentives which the Company received under one of its master repurchase agreements to finance mortgage loans that satisfied certain consumer relief characteristics, down from $9.3 million in the prior quarter and $12.5 million in the second quarter of 2018.  As the Company expected, the lender substantially curtailed the incentives provided under the master repurchase agreement through an orderly wind down of the incentive program during the quarter ended June 30, 2019.

Production segment expenses were $98.2 million, up 20 percent from the prior quarter and 40 percent from the second quarter of 2018 as a result of production volume growth.

Servicing Segment

Servicing includes income from owned MSRs, subservicing and special servicing activities.  Servicing segment pretax loss was $2.7 million, down from pretax income of $11.2 million in the prior quarter and $54.6 million in the second quarter of 2018.  Servicing segment revenues totaled $96.1 million, down 12 percent from the prior quarter and 35 percent from the second quarter of 2018.  The quarter-over-quarter decrease primarily reflects net valuation-related losses resulting from the decline in mortgage rates during the quarter, which were partially offset by increased servicing revenue and economies of scale from a larger servicing portfolio.

Net loan servicing fees totaled $59.1 million and included $218.3 million in servicing fees reduced by $106.8 million from the realization of MSR cash flows.  Net valuation-related losses totaled $52.4 million, which included MSR fair value losses of $259.2 million, partially offset by hedging gains of $203.2 million and a $3.6 million gain due to the change in fair value of the excess servicing spread liability.  The MSR fair value losses primarily resulted from expectations for increased prepayment activity driven by the decrease in mortgage rates in the quarter.

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The following table presents a breakdown of net loan servicing fees:

	Quarter ended
	June 30,  2019		March 31,  2019		June 30, 2018
	(in thousands)
Servicing fees (1)	$	218,329	$	199,377	$	161,942
Effect of MSRs:
Realization of cash flows		(106,774)		(92,475)		(65,227)
Change in fair value of MSRs		(259,205)		(164,939)		42,259
Change in fair value of excess servicing spread financing		3,604		4,051		(996)
Hedging gains (losses)		203,180		134,557		(24,289)
Total change in fair value of MSRs		(159,195)		(118,806)		(48,253)
Net loan servicing fees	$	59,134	$	80,571	$	113,689

(1) Includes contractually-specified servicing fees

Servicing segment revenue also included $22.7 million in net gains on loans held for sale from the securitization of reperforming government-insured and guaranteed loans, compared to $18.1 million in the prior quarter and $27.0 million in the second quarter of 2018.  These loans were previously purchased out of Ginnie Mae securitizations as early buyout loans and brought back to performing status through PennyMac Financial’s successful servicing efforts, primarily with the use of loan modifications.  Net interest income totaled $13.0 million, up from $10.3 million in the prior quarter and $6.7 million in the second quarter of 2018.  Interest income increased by $8.0 million from the prior quarter, primarily driven by higher interest income from custodial deposit balances, while interest expense increased by $5.4 million, driven by higher interest shortfall expense from elevated prepayment activity.

Servicing segment expenses totaled $98.8 million, essentially unchanged from the prior quarter and up 6 percent from the second quarter of 2018.

The total servicing portfolio reached $334.5 billion in UPB at June 30, 2019, an increase of 3 percent from March 31, 2019 and 27 percent from June 30, 2018, with the quarter-over-quarter growth driven by the Company’s loan production activities.  PennyMac Financial subservices and conducts special servicing for $109.1 billion in UPB, an increase of 8 percent from March 31, 2019 and 34 percent from June 30, 2018.  PennyMac Financial’s owned MSR portfolio grew to $225.3 billion in UPB, an increase of 1 percent from the prior quarter end and 24 percent from June 30, 2018.

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The table below details PennyMac Financial’s servicing portfolio UPB:

	June 30,  2019		March 31,  2019		June 30, 2018
	(in thousands)
Loans serviced at period end:
Prime servicing:
Owned
Mortgage servicing rights
Originated	$	152,546,247	$	147,987,738	$	132,307,067
Acquisitions		68,153,929		71,846,623		45,957,173
		220,700,176		219,834,361		178,264,240
Mortgage servicing liabilities		1,297,421		1,000,403		1,569,602
Loans held for sale		3,342,187		2,573,121		2,448,908
		225,339,784		223,407,885		182,282,750
Subserviced for Advised Entities		108,856,599		100,939,297		80,359,635
Total prime servicing		334,196,383		324,347,182		262,642,385
Special servicing:
Subserviced for Advised Entities		274,626		348,131		854,994
Total special servicing		274,626		348,131		854,994
Total loans serviced	$	334,471,009	$	324,695,313	$	263,497,379
Loans serviced:
Owned
Mortgage servicing rights	$	220,700,176	$	219,834,361	$	178,264,240
Mortgage servicing liabilities		1,297,421		1,000,403		1,569,602
Loans held for sale		3,342,187		2,573,121		2,448,908
		225,339,784		223,407,885		182,282,750
Subserviced		109,131,225		101,287,428		81,214,629
Total loans serviced	$	334,471,009	$	324,695,313	$	263,497,379

Investment Management Segment

PennyMac Financial manages PMT for which it earns base management fees and may earn incentive compensation.  Net assets under management were $1.9 billion as of June 30, 2019, up 13 percent from March 31, 2019 and 26 percent from June 30, 2018.  The quarter-over-quarter growth was driven by PMT’s issuance of approximately $214 million of common shares during the second quarter.

Pretax income for the Investment Management segment was $4.0 million, up from $2.1 million in the prior quarter and $1.1 million in the second quarter of 2018.  Management fees, which include base management and performance incentive fees from PMT, increased 22 percent from the prior quarter and 56 percent from the second quarter of 2018.  Base management fees were $6.8 million in the quarter, up from $6.1 million in the prior quarter as a result of PFSI’s increased assets under management.  Performance-based incentive fees were $2.0 million, up from $1.1 million in the prior quarter, driven by PMT’s strong performance.  No incentive fees were earned in the second quarter of 2018.

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The following table presents a breakdown of management fees and carried interest:

	Quarter ended
	June 30,		March 31,		June 30,
	2019		2019		2018
	(in thousands)
Management fees:
PennyMac Mortgage Investment Trust
Base	$	6,839	$	6,109	$	5,728
Performance incentive		1,993		1,139		-
		8,832		7,248		5,728
Investment Funds		-		-		(64)
Total management fees		8,832		7,248		5,664
Carried Interest		-		-		(168)
Total management fees and Carried Interest	$	8,832	$	7,248	$	5,496
Net assets of Advised Entities:
PennyMac Mortgage Investment Trust	$	1,943,934	$	1,727,589	$	1,545,487
Investment Funds		-		-		765
	$	1,943,934	$	1,727,589	$	1,546,252

Investment Management segment expenses totaled $6.3 million, down 5 percent from the prior quarter and up 9 percent from the second quarter of 2018.  The quarter-over-quarter decrease was related to seasonally higher accruals in the beginning of the year.

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Consolidated Expenses

Total expenses for the second quarter were $203.4 million, up 9 percent from the prior quarter and 20 percent from the second quarter of 2018.  The year-over-year change was primarily driven by higher volumes of activity in the Production segment.

***

Executive Chairman Stanford L. Kurland concluded, “PennyMac Financial has built an operating platform that we believe is unmatched in the mortgage industry to handle large, growing volumes of loans at the highest standards of quality and to deliver strong performance across different market environments.  Our ability to react swiftly to the increased opportunity in the loan production market reflects the significant and ongoing investments in technology and operational enhancements, such as in our mortgage fulfillment division, over the past several years.  Given the present market environment, we anticipate exceptional performance for PennyMac Financial to persist throughout the second half of this year, while the continued growth of our servicing portfolio is expected to drive long-term earnings performance.”

Management’s slide presentation will be available in the Investor Relations section of the Company’s website at ir.pennymacfinancial.com beginning at 1:30 p.m. (Pacific Time) on Thursday, August 1, 2019.

About PennyMac Financial Services, Inc.

PennyMac Financial Services, Inc. is a specialty financial services firm with a comprehensive mortgage platform and integrated business focused on the production and servicing of U.S. mortgage loans and the management of investments related to the U.S. mortgage market.  Additional information about PennyMac Financial Services, Inc. is available at ir.pennymacfinancial.com.

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This press release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, regarding management’s beliefs, estimates, projections, the recently completed corporate reorganization, the expected benefits and market and financial impact of the reorganization and assumptions with respect to, among other things, the Company’s financial results, future operations, business plans and investment strategies, as well as industry and market conditions, all of which are subject to change.  Words like “believe,” “expect,” “anticipate,” “promise,” “plan,” and other expressions or words of similar meanings, as well as future or conditional verbs such as “will,” “would,” “should,” “could,” or “may” are generally intended to identify forward-looking statements. Actual results and operations for any future period may vary materially from those projected herein and from past results discussed herein. Factors which could cause actual results to differ materially from historical results or those anticipated include, but are not limited to: the continually changing federal, state and local laws and regulations applicable to the highly regulated industry in which we operate; lawsuits or governmental actions that may result from any noncompliance with the laws and regulations applicable to our businesses; the mortgage lending and servicing-related regulations promulgated by the Consumer Financial Protection Bureau and its enforcement of these regulations; our dependence on U.S. government‑sponsored entities and changes in their current roles or their guarantees or guidelines; changes to government mortgage modification programs; the licensing and operational requirements of states and other jurisdictions applicable to the Company’s businesses, to which our bank competitors are not subject; foreclosure delays and changes in foreclosure practices; certain banking regulations that may limit our business activities; changes in macroeconomic and U.S. real estate market conditions; difficulties inherent in growing loan production volume; difficulties inherent in adjusting the size of our operations to reflect changes in business levels; purchase opportunities for mortgage servicing rights and our success in winning bids; changes in prevailing interest rates; increases in loan delinquencies and defaults; our reliance on PennyMac Mortgage Investment Trust (NYSE: PMT) as a significant source of financing for, and revenue related to, our mortgage banking business; any required additional capital and liquidity to support business growth that may not be available on acceptable terms, if at all; our obligation to indemnify third‑party purchasers or repurchase loans if loans that we originate, acquire, service or assist in the fulfillment of, fail to meet certain criteria or characteristics or under other circumstances; our obligation to indemnify PMT if its services fail to meet certain criteria or characteristics or under other circumstances; decreases in the returns on the assets that we select and manage for our clients, and our resulting management and incentive fees; the extensive amount of  regulation applicable to our investment management segment; conflicts of interest in allocating our services and investment opportunities among us and our advised entities; the effect of public opinion on our reputation; our recent growth; our ability to effectively identify, manage, monitor and mitigate financial risks; our initiation of new business activities or investment strategies or expansion of existing business activities or investment strategies; our ability to detect misconduct and fraud; our ability to mitigate cybersecurity risks and cyber incidents; our exposure to risks of loss with real estate investments resulting from adverse weather conditions and man-made or natural disasters; and our organizational structure and certain requirements in our charter documents.  You should not place undue reliance on any forward- looking statement and should consider all of the uncertainties and risks described above, as well as those more fully discussed in reports and other documents filed by the Company with the Securities and Exchange Commission from time to time.  The Company undertakes no obligation to publicly update or revise any forward-looking statements or any other information contained herein, and the statements made in this press release are current as of the date of this release only.

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PENNYMAC FINANCIAL SERVICES, INC.

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

	June 30,		March 31,		June 30,
	2019		2019		2018
	(in thousands, except share amounts)
ASSETS
Cash	$	231,388	$	144,266	$	189,663
Short-term investments at fair value		75,542		149,372		98,571
Loans held for sale at fair value		3,506,406		2,668,929		2,527,231
Assets purchased from PennyMac Mortgage Investment Trust under agreements to resell pledged to creditors		118,716		125,929		138,582
Derivative assets		168,116		121,153		92,471
Servicing advances, net		271,534		284,230		258,900
Investment in PennyMac Mortgage Investment Trust at fair value		1,637		1,553		1,424
Mortgage servicing rights		2,720,335		2,905,090		2,486,157
Real estate acquired in settlement of loans		8,160		1,690		2,300
Operating lease right-of-use assets		53,977		56,239		-
Furniture, fixtures, equipment and building improvements, net		33,373		33,423		29,607
Capitalized software, net		55,642		45,416		31,913
Receivable from PennyMac Mortgage Investment Trust		34,695		29,951		19,661
Loans eligible for repurchase		1,007,435		1,094,702		879,621
Other		111,420		157,057		85,605
Total assets	$	8,398,376	$	7,819,000	$	6,841,706
LIABILITIES
Assets sold under agreements to repurchase	$	2,747,084	$	2,151,938	$	1,825,813
Mortgage loan participation and sale agreements		523,177		547,879		528,368
Notes payable		1,293,180		1,292,736		1,140,546
Obligations under capital lease		28,295		5,091		13,032
Excess servicing spread financing payable to PennyMac Mortgage Investment Trust at fair value		194,156		205,081		229,470
Derivative liabilities		15,952		17,838		4,094
Operating lease liabilities		73,461		76,373		-
Mortgage servicing liabilities at fair value		12,948		7,844		10,253
Accounts payable and accrued expenses		151,504		162,677		114,409
Payable to PennyMac Mortgage Investment Trust		65,605		76,494		99,309
Payable to exchanged Private National Mortgage Acceptance Company, LLC unitholders under tax receivable agreement		46,537		46,537		46,903
Income taxes payable		441,336		414,636		67,357
Liability for loans eligible for repurchase		1,007,435		1,094,702		879,621
Liability for losses under representations and warranties		18,709		17,982		20,587
Total liabilities		6,619,379		6,117,808		4,979,762
STOCKHOLDERS' EQUITY
Common stock—authorized 200,000,000 shares of $0.0001 par value; issued and outstanding 78,304,899 , 78,317,843 , and 25,008,655 shares, respectively		8		8		3
Additional paid-in capital		1,317,023		1,311,914		229,941
Retained earnings		461,966		389,270		299,951
Total stockholders' equity attributable to PennyMac Financial Services, Inc. common stockholders		1,778,997		1,701,192		529,895
Noncontrolling interests in Private National Mortgage Acceptance Company, LLC		-		-		1,332,049
Total stockholders' equity		1,778,997		1,701,192		1,861,944
Total liabilities and stockholders’ equity	$	8,398,376	$	7,819,000	$	6,841,706

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PENNYMAC FINANCIAL SERVICES, INC.

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

	Quarter ended
	June 30,		March 31,		June 30,
	2019		2019		2018
	(in thousands, except earnings per share)
Revenue
Net loan servicing fees:
Loan servicing fees
From non-affiliates	$	180,753	$	166,790	$	138,871
From PennyMac Mortgage Investment Trust		11,568		10,570		9,431
From Investment Funds		-		-		3
Other fees		26,008		22,017		13,637
		218,329		199,377		161,942
Change in estimated fair value of mortgage servicing rights and excess servicing spread financing		(159,195)		(118,806)		(48,253)
Net loan servicing fees		59,134		80,571		113,689
Net gains on loans held for sale at fair value		147,533		84,776		60,946
Loan origination fees		36,924		23,930		24,428
Fulfillment fees from PennyMac Mortgage Investment Trust		29,590		27,574		14,559
Net interest income:
Interest income		70,900		58,333		55,104
Interest expense		52,924		37,543		32,616
		17,976		20,790		22,488
Management fees, net:
From PennyMac Mortgage Investment Trust		8,832		7,248		5,728
From Investment Funds		-		-		(64)
		8,832		7,248		5,664
Carried Interest from Investment Funds		-		-		(168)
Change in fair value of investment in and dividends received from PennyMac Mortgage Investment Trust		119		192		108
Results of real estate acquired in settlement of loans		743		274		13
Other		2,126		2,350		2,571
Total net revenue		302,977		247,705		244,298
Expenses
Compensation		114,717		106,600		98,540
Servicing		29,008		30,293		28,490
Technology		16,080		15,966		15,154
Loan origination		23,071		14,497		5,144
Occupancy and equipment		7,042		6,776		6,507
Professional services		6,313		5,881		5,587
Other		7,156		7,401		10,178
Total expenses		203,387		187,414		169,600
Income before provision for income taxes		99,590		60,291		74,698
Provision for income taxes		26,894		14,156		6,293
Net income		72,696		46,135		68,405
Less: Net income attributable to noncontrolling interest		-		-		50,568
Net income attributable to PennyMac Financial Services, Inc. common stockholders	$	72,696	$	46,135	$	17,837
Earnings per share
Basic	$	0.93	$	0.59	$	0.71
Diluted	$	0.92	$	0.58	$	0.70
Weighted-average common shares outstanding
Basic		78,335		77,653		24,959
Diluted		79,318		79,286		78,825

12

EX-99.2

Exhibit 99.2

Second Quarter 2019 Earnings Report

Forward-Looking Statements 2 This presentation contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, regarding management’s beliefs, estimates, projections and assumptions with respect to, among other things, the Company’s financial results, future operations, business plans and investment strategies, as well as industry and market conditions, all of which are subject to change. Words like “believe,” “expect,” “anticipate,” “promise,” “plan,” and other expressions or words of similar meanings, as well as future or conditional verbs such as “will,” “would,” “should,” “could,” or “may” are generally intended to identify forward-looking statements. Actual results and operations for any future period may vary materially from those projected herein and from past results discussed herein. These forward-looking statements include statements regarding the Company’s corporate reorganization, the expected benefits of such reorganization and the related impact on existing stakeholders, estimates regarding future market capitalization and the anticipated financial impact of the corporate reorganization. Factors which could cause actual results to differ materially from historical results or those anticipated include, but are not limited to: the continually changing federal, state and local laws and regulations applicable to the highly regulated industry in which we operate; lawsuits or governmental actions that may result from any noncompliance with the laws and regulations applicable to our businesses; the mortgage lending and servicing-related regulations promulgated by the Consumer Financial Protection Bureau and its enforcement of these regulations; our dependence on U.S. government-sponsored entities and changes in their current roles or their guarantees or guidelines; changes to government mortgage modification programs; the licensing and operational requirements of states and other jurisdictions applicable to the Company’s businesses, to which our bank competitors are not subject; foreclosure delays and changes in foreclosure practices; certain banking regulations that may limit our business activities; changes in macroeconomic and U.S. real estate market conditions; difficulties inherent in growing loan production volume; difficulties inherent in adjusting the size of our operations to reflect changes in business levels; purchase opportunities for mortgage servicing rights and our success in winning bids; changes in prevailing interest rates; increases in loan delinquencies and defaults; our reliance on PennyMac Mortgage Investment Trust (NYSE: PMT) as a significant source of financing for, and revenue related to, our mortgage banking business; any required additional capital and liquidity to support business growth that may not be available on acceptable terms, if at all; our obligation to indemnify third-party purchasers or repurchase loans if loans that we originate, acquire, service or assist in the fulfillment of, fail to meet certain criteria or characteristics or under other circumstances; our obligation to indemnify PMT if our services fail to meet certain criteria or characteristics or under other circumstances; decreases in the returns on the assets that we select and manage for our clients, and our resulting management and incentive fees; the extensive amount of regulation applicable to our investment management segment; conflicts of interest in allocating our services and investment opportunities among us and our advised entities; the effect of public opinion on our reputation; our recent growth; our ability to effectively identify, manage, monitor and mitigate financial risks; our initiation of new business activities or expansion of existing business activities; our ability to detect misconduct and fraud; and our ability to mitigate cybersecurity risks and cyber incidents. Our exposure to risks of loss resulting from adverse weather conditions and man-made or natural disasters; and or organizational structure and certain requirements in our charter documents. You should not place undue reliance on any forward-looking statement and should consider all of the uncertainties and risks described above, as well as those more fully discussed in reports and other documents filed by the Company with the Securities and Exchange Commission from time to time. The Company undertakes no obligation to publicly update or revise any forward-looking statements or any other information contained herein, and the statements made in this presentation are current as of the date of this presentation only.

Second Quarter Highlights 3 .. Net income was $72.7 million; diluted earnings per share (EPS) were $0.92 – Driven by strong Production segment performance and disciplined hedging of mortgage servicing rights (MSRs) – Repurchased approximately 50,000 shares of PFSI’s common stock at a weighted average price of $20.77 per share – Book value per share increased to $22.72 from $21.72 at March 31, 2019 .. Production segment pretax income was $98.2 million, up 109% from 1Q19 and 417% from 2Q18 – Total acquisition and origination volume was $24.1 billion in unpaid principal balance (UPB), up 45% from 1Q19 and 51% from 2Q18 – PFSI’s correspondent locks(1) were $12.7 billion in UPB, up 64% from 1Q19 and 24% from 2Q18 – Direct lending locks were $4.1 billion in UPB, up 53% from 1Q19 and 129% from 2Q18 – Correspondent acquisitions of conventional loans fulfilled for PennyMac Mortgage Investment Trust (NYSE: PMT) were $10.7 billion in UPB, up 32% from 1Q19 and 99% from 2Q18 (1) Consists of correspondent government and non-delegated interest rate lock commitments (“IRLCs”)

4 .. Servicing segment pretax loss was $2.7 million, down from pretax income of $11.2 million in 1Q19 and $54.6 million in 2Q18 – Valuation-related items included a $259.2 million loss in the fair value of MSRs, partially offset by $209.4 million in hedging and other gains; net impact on pretax income was $(49.8) million and on EPS was $(0.46) – Pretax income excluding valuation-related items was $47.1 million, up 33% from 1Q19 and 32% from 2Q18 o Record quarterly operating profitability driven by a growing servicing portfolio coupled with the ongoing realization of greater scale and cost efficiencies – Servicing portfolio grew to $334.5 billion in UPB, up 3% from March 31, 2019 and 27% from June 30, 2018 .. Investment Management segment pretax income was $4.0 million, up from $2.1 million in 1Q19 and $1.1 million in 2Q18 – Revenue of $10.4 million in 2Q19, an increase of 18% from 1Q19 and 50% from 2Q18 – Net assets under management (AUM) were $1.9 billion, up 13% from March 31, 2019 and 26% from June 30, 2018, driven by $214 million in new common equity raised by PMT during the quarter in light of its significant investment opportunities Second Quarter Highlights (continued)

5 Average 30-year fixed rate mortgage(1) . The Federal Reserve recently cut the Fed Funds rate by 25 basis points, with additional cuts expected by year end – The U.S. economic outlook has weakened, weighed down by global growth concerns and uncertainty around trade tensions .. The average 30-year fixed rate mortgage ended the second quarter at 3.73%, 0.33% lower than at March 31st – Decline has resulted in higher refinance activity and increases to 2019 origination forecasts – Approximately 50% of mortgages in Agency mortgage- backed securities (MBS) now eligible for refinance (75% of 2017 - 2019 vintages)(3) .. Purchase originations are expected to grow supported by moderating home price appreciation and low mortgage rates .. Mortgage delinquency rates remain near all-time lows, but increased slightly from the prior quarter end – The total U.S. loan delinquency rate ended the quarter at 3.73%, up slightly from 3.65% at March 31, 2019(4) .. Spreads on seasoned government-sponsored enterprise (GSE) credit risk transfer (CRT) securities widened slightly relative to 1Q19 due to faster prepayment expectations, while newer issue CRT spreads tightened slightly Current Market Environment 4.06% 3.73% (1) Freddie Mac Primary Mortgage Market Survey. 3.75% as of 7/25/19 (2) Actual Home Sales: National Association of Realtors (existing) and the Census Bureau (new). Home sales Forecast: Average of Mortgage Bankers Association and Fannie Mae. Actual purchase and total originations: Inside Mortgage Finance. Purchase and total originations forecast: Average of Mortgage Bankers Association, Fannie Mae, Freddie Mac. Actual home price appreciation: FHFA Home Price Index. Forecasted home price appreciation: Average of Mortgage Bankers Association, Fannie Mae, Freddie Mac. (3) Citi Research (4) Black Knight Financial Services. Includes loans that are 30 days or more past due but not in foreclosure Macroeconomic Forecasts(2) 3.0% 3.5% 4.0% 4.5% 5.0% 5.5% Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Mar-19 Jun-19 2016 2017 2018 2019E 2020E 2021E New home sales ('000s) 561 616 620 664 662 682 Existing home sales ('000s) 5,440 5,547 5,339 5,373 5,460 5,559 Total originations ($ in billions) $2,065 $1,810 $1,630 $1,730 $1,684 $1,740 Purchase originations ($ in billions) $1,037 $1,144 $1,141 $1,210 $1,247 $1,308 U.S. Home Price Appreciation (Y/Y % Change) 5.8% 6.9% 6.3% 4.3% 3.0% 2.6% Green: denotes improvement since previous earnings report Red: denotes drop since previous earnings report

6 6 $7.27 $8.04 $9.92 $12.32 $15.49 $19.95 $21.34 $22.72 6/30/2013 12/31/2013 12/31/2014 12/31/2015 12/31/2016 12/31/2017 12/31/2018 6/30/2019 PFSI’s Earnings Have Driven Strong Book Value Growth Track record of strong profitability and book value growth since 2008(1) Book Value Per Share of PFSI 21% CAGR (1) Private National Mortgage Acceptance Company, LLC (PNMAC) commenced operations in 2008 and is a wholly-owned subsidiary of PFSI, which completed its initial public offering in May 2013.

7 PFSI Business Model Drives Outperformance and Growth Opportunity .. Our balanced mortgage banking model combined with disciplined execution are key to results – Foundation of governance and risk management to ensure resilience across economic cycles – Production designed to be efficient across all channels with centralized mortgage fulfillment – Organic replenishment of the servicing portfolio drives consistent growth and increasing scale benefits – Investment management business and partnership with PMT create unique opportunities – Strong capital foundation supports continued investment growth, including organic MSRs and bulk MSR acquisitions .. Substantial investments in technology and operational capabilities have made us more agile in response to market changes, such as the current production market opportunity – Innovative, data-driven fulfillment processes that drive higher accuracy and capacity at lower cost – Internally developed pricing systems designed to improve risk-based returns – Proprietary servicing technology solutions and workflow enhancements to drive continued cost efficiencies .. We will continue to pursue organic growth initiatives that will allow us to sustain our leadership position and drive future market share growth – PennyMac Financial possesses the operational expertise, access to capital and ability to leverage technology in order to achieve greater scale benefits and adapt to market changes – Continued distinction in service levels across all channels of mortgage production through operational excellence and technology-driven competitive advantages which are expected to drive market share gains – Opportunities to supplement organic growth through acquisition of bulk MSRs remains a strategic focus

0.12% 0.39% 0.64% 2Q18 3Q18 4Q18 1Q19 2Q19E Correspondent Production(1) Market Share Market Share Consumer Direct Production(1) Loan Servicing(1) Market Share Broker Direct Production(1) Market Share 8 Trends in PennyMac Financial’s Businesses (1) Source: Inside Mortgage Finance and company estimates. Inside Mortgage Finance estimates total 2Q19 origination market of $565 billion. Correspondent production share estimate is based on PFSI and PMT acquisition volume of $21.7 billion divided by $180 billion for the correspondent market (estimated to be 32% of total origination market). Consumer direct production share is based on PFSI originations of $2.0 billion divided by $316 billion for the retail market (estimated to be 56% of total origination market). Broker direct production share is based on PFSI originations of $442 million divided by $69 billion for the broker market (estimated to be 12% of total origination market). Loan servicing market share is based on PFSI’s servicing UPB of $334.5 billion divided by an estimated $11.0 trillion in mortgage debt outstanding as of March 31, 2019. 0.50% 0.36% 0.69% 0.62% 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19E 10.95% 10.76% 13.82% 12.08% 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19E 2.19% 2.45% 2.95% 3.04% 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19E

$9.5 $6.8 $10.6 $5.4 $8.1 $10.7 $0.2 $0.4 $16.2 $16.7 $25.3 2Q18 1Q19 2Q19 Government loans Conventional loans for PMT Non-delegated loans Total locks 9 (UPB in billions) Correspondent Volume and Mix Production Segment Highlights – Correspondent Channel (2) (3) (4) .. Correspondent acquisitions by PMT in 2Q19 totaled $21.7 billion in UPB, up 44% Q/Q and 45% Y/Y – 49% government loans; 51% conventional loans – Government acquisitions of $10.6 billion in UPB, up 57% Q/Q and 11% Y/Y – Conventional conforming acquisitions of $10.7 billion in UPB, up 32% Q/Q and 99% Y/Y – Non-delegated acquisitions increased 132% Q/Q to $402 million in UPB .. PFSI’s correspondent lock volume totaled $12.7 billion in UPB, up 64% Q/Q and 24% Y/Y(1) – Delegated government locks totaled $12.0 billion in UPB, up 63% Q/Q and 19% Y/Y – Non-delegated locks totaled $636 million in UPB, up 77% Q/Q .. Technology-driven centralized fulfillment platform demonstrates scalability with consistently high quality – Maintained fast turn times and high service levels to our correspondents, while processing record production volumes .. July correspondent acquisitions totaled $10.3 billion in UPB; locks totaled $10.8 billion in UPB (1) Includes correspondent government and non-delegated IRLCs (2) For government-insured, guaranteed and non-delegated loans, PFSI earns income from holding and selling or securitizing the loans (3) For conventional and jumbo loans, PFSI earns a fulfillment fee from PMT rather than income from holding and selling or securitizing the loans (4) Includes locks related to PMT loan acquisitions, including conventional loans for which PFSI earns a fulfillment fee upon loan funding (5) Includes net gains on loans held for sale, loan origination fees and net interest income for government-insured and non-delegated correspondent loans; lock volume adjusted for expected fallout for government-insured correspondent locks (5%) and non-delegated correspondent locks (26%) (6) Based on funded loans subject to fulfillment fee. The rate may reflect discretionary adjustments to facilitate the successful completion of certain loan transactions 1Q19 2Q19 Revenue per fallout-adjusted PFSI correspondent lock(5) 30 30 Weighted average fulfillment fee (bps)(6) 34 28 1Q19 2Q19 Correspondent seller relationships 743 752 Purchase-money loans, as a % of total acquisitions 85% 79% Key Financial Metrics Selected Operational Metrics

$0.9 $1.4 $2.0 $0.8 $1.0 $1.5 2Q18 1Q19 2Q19 Portfolio-sourced fundings Non-portfolio fundings Committed pipeline (UPB in billions) Consumer Direct Production Volume 10 Production Segment Highlights – Consumer Direct Channel (1) (1) Commitments to originate mortgage loans at specified terms at period end (2) Includes net gains on loans held for sale, loan origination fees and net interest income; lock volume adjusted for expected fallout, which was 33% in 2Q19 for consumer direct locks .. Consumer direct production volume in 2Q19 totaled $2.0 billion in UPB, up 45% Q/Q and 116% Y/Y .. Higher volumes and profitability driven by a doubling of rate and term refinance volume from the prior quarter .. Investments in our centralized mortgage fulfillment end-to-end process yielding benefits in expanded operational capacity and greater efficiency – Loan count funded increased 38% Q/Q, enabled by the scalability of our centralized mortgage fulfillment platform – Pull-through of 67% in 2Q19 up from 65% in the prior quarter .. July 2019 consumer direct originations totaled $890 million in UPB; locks totaled $1.4 billion in UPB – $1.7 billion committed pipeline at July 31, 2019(1) 1Q19 2Q19 Revenue per fallout-adjusted consumer direct lock (bps)(2) 387 433 Consumer Direct Margin

$32 $121 $289 $30 $75 $153 $62 $196 $442 $38 $129 $249 2Q18 1Q19 2Q19 Conventional loans Government loans Committed pipeline 11 Production Segment Highlights – Broker Direct Channel Broker Direct Production Volume (UPB in millions) (1) (1) Commitments to originate mortgage loans at specified terms at period end (2) Includes net gains on loans held for sale, loan origination fees and net interest income; lock volume adjusted for expected fallout, which was 26% in 2Q19 for broker direct locks .. Broker direct production volume in 2Q19 totaled $442 million in UPB, up 126% Q/Q and up from $62 million in 2Q18 – Lower mortgage rates and growth of approved brokers helped to drive 108% Q/Q growth in purchase volume .. Lock volume of $710 million in 2Q19, up 121% Q/Q and up from $101 million in 2Q18 .. Approved brokers totaled 784 at June 30, 2019, up from 682 at March 31, 2019 .. Completed additional enhancements to our POWER broker portal to improve the loan closing experience .. July broker direct originations totaled $215 million in UPB; locks totaled $300 million in UPB – $286 million committed pipeline at July 31, 2019(1) 1Q19 2Q19 Revenue per fallout-adjusted broker direct lock (bps)(2) 77 98 Approved brokers 682 784 Broker Direct Metrics

$324.7 $334.5 ($14.3) $24.1 At 3/31/19 Runoff Additions from loan production At 6/30/19 (1) 12 Servicing Segment Highlights (1) Owned portfolio in predominantly government-insured and guaranteed loans under the FHA (52%), VA (35%), and USDA (8%) programs (2) Represents PMT’s MSRs. Excludes distressed loan investments (3) Early buyouts of delinquent loans from Ginnie Mae pools during the period (4) Also includes loans servicing released in connection with recent asset sales by PMT (5) Includes consumer direct production, government correspondent acquisitions, and conventional conforming and jumbo loan acquisitions subserviced for PMT (UPB in billions) .. Servicing portfolio totaled $334.5 billion in UPB at June 30, 2019, up 3% Q/Q and 27% Y/Y – Organic growth from strong production activity .. Delinquency rates remain very low – 60+ day delinquency rate unchanged from March 31, 2019, and lower than June 30, 2018 levels .. Increase in 2Q19 early buyout (EBO) transaction volume reflects expanded opportunities for buyouts driven by lower interest rates .. Growth in completed loan modification activity reflects increased buyout volume year-to-date Loan Servicing Portfolio Composition Net Portfolio Growth (UPB in billions) (4) (5) $263.5 $324.7 $334.5 6/30/18 3/31/19 6/30/19 Prime owned Prime subserviced and other 1Q19 2Q19 Loans serviced (in thousands) 1,607 1,652 60+ day delinquency rate - owned portfolio(1) 3.0% 3.0% 60+ day delinquency rate - sub-serviced portfolio(2) 0.4% 0.4% Actual CPR - owned portfolio(1) 10.1% 15.8% Actual CPR - sub-serviced(2) 7.6% 13.1% UPB of completed modifications ($ in millions) $483 $584 EBO transactions ($ in millions)(3) $765 $868 Selected Operational Metrics

$1.55 $1.73 $1.94 6/30/2018 3/31/2019 6/30/2019 Investment Management Revenues (1) 13 (1) As of June 30, 2019 Investment Management Segment Highlights Investment Management AUM ($ in billions) .. Net assets under management as of June 30, 2019 were $1.9 billion, up 13% from March 31, 2019 .. As a result of increased investment opportunities and strong results, PMT successfully raised additional capital in 2Q19 – PMT raised approximately $170 million in net proceeds from an issuance of 8.1 million of its common shares in an underwritten equity offering – Also raised $44 million in net proceeds from the issuance of 2.1 million shares through PMT’s “At The Market” (ATM) common equity program .. Investment Management revenues increased 18% Q/Q, driven by growth in both base management and performance-based incentives fees ($ in millions) $6.9 $7.7 $8.4 $1.1 $2.0 $6.9 $8.8 $10.4 2Q18 1Q19 2Q19 Base management fees & other Performance incentive

14 MSR Valuation Changes and Offsets ($ in millions) Hedging Approach Continues to Moderate the Volatility of PFSI’s Results Note: Figures may not sum exactly due to rounding .. PFSI seeks to moderate the impact of interest rate changes on the fair value of its MSR asset through a comprehensive hedge strategy that also considers production-related income .. In 2Q19, MSR fair value decreased primarily due to the decrease in interest rates, resulting in expectations for higher prepayment activity in the future – Market-driven decline represented approximately 9% of the fair value at March 31, 2019 .. Gains from hedging activities and rate- driven fair value decrease of the ESS liability largely offset MSR fair value losses – Ongoing hedge costs reduced these gains, which totaled $206.8 million $42.3 ($164.9) ($259.2) ($25.3) $138.6 $206.8 $19.0 $47.0 $98.2 2Q18 1Q19 2Q19 MSR fair value change before recognition of realization of cash flows Change in fair value of hedges and ESS liability Production pretax income

15 (1) Of average portfolio UPB, annualized (2) Comprised of net gains on mortgage loans held for sale at fair value and net interest income related to EBO loans (3) Changes in fair value do not include realization of MSR cash flows, which are included in amortization and realization of MSR cash flows above (4) Includes fair value changes and provision for impairment (5) Considered in the assessment of MSR fair value changes .. Solid operating results driven by portfolio growth and expense management – Scale efficiencies continue to be realized; operating expenses as a percentage of the overall servicing portfolio continue to decline – Higher interest income from custodial balances .. EBO-related income benefited from lower rates in 2Q19 –Elevated buyout volumes expected to benefit future period income Servicing Profitability Excluding Valuation-Related Changes 2Q18 1Q19 2Q19 $ in millions basis points(1) $ in millions basis points(1) $ in millions basis points(1) Operating revenue 180.8 $ 27.9 225.0 $ 29.2 253.7 $ 30.8 Realization of MSR cash flows (65.2) (10.1) (92.5) (12.0) (106.8) (13.0) EBO-related revenue(2) 45.1 7.0 35.1 4.6 38.2 4.6 Servicing expenses: Operating expenses (74.4) (11.5) (80.1) (10.4) (84.0) (10.2) Credit losses and provisions for defaulted loans (15.0) (2.3) (15.1) (2.0) (16.0) (1.9) EBO transaction-related expense (11.4) (1.8) (10.7) (1.4) (10.6) (1.3) Financing expenses: Interest on ESS (3.9) (0.6) (3.1) (0.4) (2.8) (0.3) Interest to third parties (20.3) (3.1) (23.3) (3.0) (24.6) (3.0) Pretax income excluding valuation-related changes 35.8 $ 5.5 35.3 $ 4.6 47.1 $ 5.7 Valuation-related changes(3) MSR fair value(4) 42.3 (164.9) (259.2) ESS liability fair value (1.0) 4.1 3.6 Hedging derivatives gains (losses) (24.3) 134.6 203.2 Reversal of liability for credit losses on active loans(5) 1.8 2.2 2.6 Servicing segment pretax income 54.6 $ 11.2 $ (2.7) $ Average servicing portfolio UPB 259,413 $ 308,212 $ 329,356 $

Appendix

. Complex and highly regulated mortgage industry requires effective governance, compliance and operating systems .. Operating platform has been developed organically and is highly scalable .. Commitment to strong corporate governance, compliance and risk management since inception .. PFSI is well positioned for continued growth in this market and regulatory environment Loan Production Loan Servicing Investment Management .. Servicing for owned MSRs and subservicing for PMT .. Major loan servicer for Fannie Mae, Freddie Mac and Ginnie Mae .. Industry-leading capabilities in special servicing .. Organic growth results from loan production, supplemented by MSR acquisitions and PMT investment activity .. External manager of PMT, which is focused on investing in mortgage-related assets: – GSE credit risk transfers – MSRs and ESS – Investments in prime non- Agency MBS and asset-backed securities – HELOC and prime non-QM securitization interests(1) – Distressed whole loans .. Synergistic partnership with PMT .. Correspondent aggregation of newly originated loans from third-party sellers – PFSI earns gains on delegated government-insured and non- delegated loans – Fulfillment fees for PMT’s delegated conventional loans .. Consumer direct origination of conventional and government- insured loans .. Broker direct origination launched in 2018 17 Overview of PennyMac Financial’s Businesses (1) Home Equity Line of Credit = HELOC; Non-QM = Non-qualified mortgage

Other Assets & Receivables $586 Loans eligible for repurchase $1,007 Servicing Advances $272 Cash & Short-term Investments $307 Mortgage Servicing Rights $2,720 Loans Held for Sale $3,506 Stockholders' Equity $1,779 Other Liabilities & Payables $854 Liability for loans eligible for repurchase $1,007 ESS Financing $194 MSR VFN Repo $155 MSR Term Notes $1,293 Warehouse Financing $3,115 $8,398 $8,398 Assets Liabilities & Equity PennyMac Financial Is a Strong Independent Mortgage Company 18 .. Comprehensive mortgage platform and balanced model with leading production and servicing businesses .. Strong balance sheet with low leverage versus competitors – Debt to equity of 2.7x .. Diversified liquidity sources and term debt that finances the largest long-term asset (MSRs) – Unique and cost effective funding structures with strong bank partnerships to support growth .. Well-developed and sophisticated risk management structure combines extensive market expertise with technology to identify and monitor risks across the enterprise .. Simplified corporate structure in 2018; all equity ownership converted to a single class of common stock Considerable oversight from State regulators, the CFPB, GSEs, ratings agencies and bank counterparties As of June 30, 2019 ($ in millions)

19 PFSI Has Developed in a Sustainable Manner for Long-Term Growth • Disciplined growth to address the demands of the GSEs, Agencies, regulators and our financing partners - Since inception, PennyMac has focused on building and testing processes and systems before adding significant transaction volumes • Highly experienced management team has created a robust corporate governance system centered on compliance, risk management and quality control .. Operations launched; de novo build of legacy-free mortgage servicer .. Raised $500 million of capital in private opportunity funds .. PMT formed in an initial public offering raising $320 million .. Correspondent group established with a focus on operations development and process design .. Added servicing leadership for prime portfolio and to drive scalable growth .. Correspondent system launches .. Expanded infrastructure with flagship operations facility in Moorpark, CA .. Correspondent leadership team expands .. Expanded infrastructure in Tampa, FL .. Became largest non-bank correspondent aggregator .. PFSI completed initial public offering .. Expanded infrastructure in Fort Worth, TX .. Continued organic growth .. Servicing UPB reaches $100 billion .. Stockholders’ equity surpasses $1 billion .. Substantial growth in consumer direct capacity .. Issued MSR-backed term notes .. PFSI completes corporate reorganization .. Record first half production of $41 billion in UPB Period End: Employees(1): 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 72 128 230 435 1,008 1,373 1,816 2,523 3,099 3,248 3,460 3,616 (1) 2019 figure is as of June 30, 2019

20 Industry-leading platform built organically – not through acquisitions .. Disciplined, sustainable growth for more than 11 years .. Focused on building and testing processes and systems before large transaction volumes Distinctive expertise and full range of capabilities across mortgage banking and investment management  Loan production, e.g., loan fulfillment systems and operations, correspondent counterparty review and management  Credit, e.g., loan program development, underwriting and quality control  Capital markets, e.g., pooling and securitization, hedging/interest rate risk management  Servicing, e.g., customer service, default management, investor accounting  Corporate functions, e.g., enterprise risk management, internal audit, treasury, finance and accounting, legal, IT infrastructure and development .. Over 3,600 employees .. Highly experienced management team – 132 senior-most executives have, on average, 24 years of relevant industry experience Strong governance and compliance culture .. Led by distinguished board which includes eight independent directors .. Robust management governance structure with 9 committees that oversee key risks and controls .. External oversight by regulators, business partners and other third parties Desired structure in place to compete effectively as a non-bank .. Synergistic partnership with PMT, a leading residential mortgage REIT and long-term investment vehicle .. Provides access to efficient capital and reduces balance sheet constraints on growth PennyMac Financial Is in a Unique Position Among Mortgage Specialists

21 Why Are MSR Sales Occurring? How Do MSRs Come to Market? .. Large servicers may sell MSRs due to operational pressures, higher regulatory capital requirements for banks (treatment under Basel III) and a re-focus on core customers/businesses .. Independent mortgage banks sell MSRs from time to time due to a need for capital .. Intermittent large bulk portfolio sales ($10+ billion in UPB) Require considerable coordination with selling institutions and Agencies .. Mini-bulk sales (typically $500 million to $5 billion in UPB) .. Flow/co-issue MSR transactions (monthly commitments, typically $20-$100 million in UPB) Alternative delivery method typically from larger independent originators Which MSR Transactions Are Attractive? .. GSE and Ginnie Mae servicing in which PFSI has distinctive expertise .. MSRs sold and operational servicing transferred to PFSI (not subserviced by a third party) .. Measurable representation and warranty liability for PFSI PFSI is uniquely positioned to be a successful acquirer of MSRs • Proven track record of complex MSR and distressed loan transfers • Operational platform that addresses the demands of the Agencies, regulators and financing partners • Physical capacity in place to sustain servicing portfolio growth plans • Potential co-investment opportunity for PMT in the ESS Opportunity in MSR Acquisitions

22 Excess Servicing Spread (e.g., 12.5bp) MSR Asset (e.g., 25bp servicing fee) Acquired by PFSI from Third-Party Seller(1) .. PMT has co-invested in Agency MSRs acquired from third-party sellers by PFSI; presently only related to certain Ginnie Mae MSRs .. PMT acquires the right to receive the ESS cash flows over the life of the underlying loans .. PFSI owns the MSRs and services the loans (1) The contractual servicer and MSR owner is PLS, an indirect wholly-owned subsidiary of PFSI (2) Subject and subordinate to Agency rights (under the related servicer or issuer guide) and, as applicable, to PFSI’s pledge of MSRs under a note payable; does not change the contractual servicing fee paid by the Agency to the servicer Excess Servicing Spread(2) .. Interest income from a portion of the contractual servicing fee – Realized yield dependent on prepayment speeds and recapture Base MSR .. Income from a portion of the contractual servicing fee .. Also entitled to ancillary income .. Bears expenses of performing loan servicing activities .. Required to advance certain payments largely for delinquent loans Base MSR (e.g., 12.5bp) Acquired by PMT from PFSI(1) Example transaction: actual transaction details may vary materially PFSI’s Mortgage Servicing Rights Investments in Partnership with PMT

23 MSR Asset Valuation Note: Figures may not sum exactly due to rounding UPB $199,257 $21,443 $220,700 Weighted average coupon 3.98% 4.19% 4.00% Prepayment speed assumption (CPR) 13.5% 11.1% 13.3% Weighted average servicing fee rate 0.33% 0.34% 0.33% Fair value of MSR $2,446.6 $273.8 $2,720.3 As a multiple of servicing fee 3.69 3.74 3.70 Related excess servicing spread liability - $194.2 $194.2 June 30, 2019 Unaudited ($ in millions) Total Subjectto excess servicing spread liability Not subject to excess servicing spread liability

24 Note: Figures may not sum exactly due to rounding (1) Consists of prime jumbo and non-QM loans Acquisitions and Originations by Product First Lien Acquisitions/Originations Second Lien Originations Unaudited ($ in millions) Correspondent Acquisitions Delegated Conventional Conforming 5,399 $ 7,503 $ 9,052 $ 8,130 $ 10,737 $ Delegated Government 9,546 8,970 8,885 6,752 10,574 Delegated Non-Agency(1) 8 9 5 5 4 Non-Delegated - 75 120 174 402 Total 14,954 $ 16,556 $ 18,061 $ 15,061 $ 21,718 $ Consumer Direct Originations Conventional 634 $ 832 $ 740 $ 609 $ 838 $ Government 278 459 447 748 1,127 Jumbo - - - - - Total 911 $ 1,291 $ 1,187 $ 1,357 $ 1,965 $ Broker Direct Originations Conventional 32 $ 70 $ 139 $ 121 $ 289 $ Government 30 41 60 75 153 Jumbo - - - - - Total 62 $ 111 $ 199 $ 196 $ 442 $ Total acquisitions/originations 15,927 $ 17,958 $ 19,448 $ 16,614 $ 24,125 $ UPB of loans fulfilled for PMT 5,408 $ 7,512 $ 9,056 $ 8,136 $ 10,741 $ 2Q18 3Q18 4Q18 1Q19 2Q19 Consumer Direct Fundings HELOC - $ - $ - $ 1 $ 1 $

25 Interest Rate Locks by Product First Lien Locks Note: Figures may not sum exactly due to rounding (1) Consists of prime jumbo and non-QM loans Unaudited ($ in millions) Correspondent Locks Delegated Conventional Conforming 5,979 $ 8,392 $ 9,639 $ 8,974 $ 12,628 $ Delegated Government 10,082 9,146 8,962 7,385 12,028 Delegated Non-Agency(1) 50 20 11 13 14 Non-Delegated 121 157 227 360 636 Total 16,232 $ 17,714 $ 18,839 $ 16,732 $ 25,307 $ Consumer Direct Locks Conventional 1,018 $ 1,106 $ 925 $ 1,103 $ 1,413 $ Government 625 659 735 1,226 1,938 Jumbo 29 24 13 11 6 Total 1,672 $ 1,789 $ 1,673 $ 2,340 $ 3,357 $ Broker Direct Locks Conventional 50 $ 131 $ 195 $ 187 $ 461 $ Government 51 65 84 133 249 Jumbo - - - - - Total 101 $ 196 $ 279 $ 321 $ 710 $ Total locks 18,005 $ 19,699 $ 20,791 $ 19,393 $ 29,373 $ 2Q18 3Q18 4Q18 1Q19 2Q19

26 Credit Characteristics by Acquisition / Origination Period Correspondent Consumer Direct Broker Direct 2Q18 3Q18 4Q18 1Q19 2Q19 Government-insured 697 699 700 699 698 Conventional 748 748 751 750 755 Weighted Average FICO 2Q18 3Q18 4Q18 1Q19 2Q19 Government-insured 43 44 44 44 43 Conventional 37 38 38 38 36 Weighted Average DTI 2Q18 3Q18 4Q18 1Q19 2Q19 Government-insured 709 700 696 699 703 Conventional 736 731 730 733 738 Weighted Average FICO 2Q18 3Q18 4Q18 1Q19 2Q19 Government-insured 43 44 44 44 43 Conventional 38 38 38 37 37 Weighted Average DTI 2Q18 3Q18 4Q18 1Q19 2Q19 Government-insured 680 684 689 680 697 Conventional 751 751 746 742 752 Weighted Average FICO 2Q18 3Q18 4Q18 1Q19 2Q19 Government-insured 46 44 45 45 44 Conventional 37 37 38 38 37 Weighted Average DTI